DUBAI (Reuters) - Growth in Saudi Arabia’s non-oil private sector was at its slowest in just over a year in January, as cautious consumer spending hampered new business growth and export sales dipped, a survey showed on Tuesday.
The seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers’ Index (PMI) declined to 54.9 in January from 56.9 in December. Any reading above the 50 mark indicates expansion.
The headline figure - which gives a measure of operating conditions in the non-oil private economy - was the lowest since December 2018.
“January data suggested that non-oil private sector companies remained in expansion mode. However, business activity was again constrained by a slowdown in new order growth,” said Tim Moore, Economics Associate Director at IHS Markit.
“The latest rise in sales volumes was the softest recorded for 13 months,” he said.
Saudi Arabia, the world’s biggest oil exporter, is aiming to boost the private sector and diversify its revenues, but will likely see its growth curbed this year because of sliding oil prices and crude output cuts agreed with OPEC allies.
Growth in the non-oil private sector averaged 57.1 last year, index data showed, markedly up from a 53.8 average in 2018, when growth was sluggish after Riyadh introduced a 5% VAT to improve non-oil revenue generation after a plunge in oil prices from mid-2014.
But it lost momentum in December, weighed down by slower output and new orders.
In January, new export orders fell below the 50.0 no-change threshold for a second consecutive month, reflecting subdued business conditions in key overseas markets, according to the survey.
Employment slowed down too in January, remaining just slightly above the 50 mark, the slowest rate of job creation since August 2019.
Reporting by Davide Barbuscia; Editing by Hugh Lawson